Dear Joshua (or Dear Prof. Smith or whatever you use to call him),
I have submitted all the necessary documents to Agency ABC and I am awaiting the file to be processed. I will let you know whenever I get any more information. They told me that it's expected by the end of November.
Since I was assured that the application will be eventually accepted, I would like to ask you if we could meet to discuss the topic of the PhD in more detail, so that I can start to study the related literature.
This is just an example of a reply I would make. The level of politeness you choose should reflect your previous communication and your relationship.
As well, you're not going to say that the application is accepted if it is not. So in general, just inform him about the status and show your interest in the cooperation. You don't need to make it long, he's basically asking for a status of the thing and he's most probably expecting a short and on-the-spot reply.